Northern Rock targeted by US private equity group Blackstone

City brokers doubt that a sale this year will see the taxpayer recoup the £1.4bn the government has injected into Northern Rock. Photograph: Christopher Thomond for the Guardian Christopher Thomond/Guardian

American private equity group Blackstone is considering a £1bn bid for Northern Rock, the bank nationalised by the government in 2008 which George Osborne said this week would be returned to the private sector.

Headed by billionaire Stephen Schwarzman, Blackstone is hoping for a repeat of its successful investment in BankUnited of Florida, which it acquired with partners at the height of the financial crisis. BankUnited collapsed in 2009, but was bought by a consortium including Blackstone for $945m in 2009 then floated for $2.6bn on Wall Street in January. Investors almost tripled their money.

Blackstone's interest in Northern Rock will alarm critics of private equity who accuse the industry of short-termism and asset-stripping.

Schwarzman's firm has been under fire over Southern Cross, Britain's biggest care homes operator, which is struggling to avoid administration. Blackstone owned it between 2004 and 2006 and has been accused by the GMB union of supporting a business model that left Southern Cross with an unsustainable rent bill – accusations Schwarzman rejects.

Analysts say Blackstone will scrutinise the information memorandum on Northern Rock, which will be circulated to interested parties in the next few weeks.

It is thought Blackstone could bid alone for Northern Rock, which is said by experts to be worth little more than £1bn, or ally itself to another bidder. But Schwarzman faces intense competition, with Virgin Money, National Australia Bank, the Coventry and Yorkshire building societies, investment groups NBNK and Olivant, as well as Tesco Bank, in the running.

Brokers doubt a sale this year will see the taxpayer recoup the £1.4bn injected into Northern Rock, and several expressed doubts about the wisdom of selling into a depressed market. One said: "Bank equity prices are down where they were in 2009 and most UK banks are trading below their book values." But others said that if reports that UK house prices could fall by 10% or more over the next year are to be believed, it may not be a bad time to sell.

Although the sale of Northern Rock could generate a loss, this is expected to be offset by the repayment of tens of billions of state-supported loans held in the "bad bank", Northern Rock Asset Management, which was split out of the company at nationalisation.

Andrea Leadsom, a Conservative member of the Treasury select committee, said: "We want to introduce more competition into the banking sector, and selling Northern Rock is one way of achieving that objective. We can't sit on our hands forever."

But Labour members of the committee such as Chuka Umunna have expressed disappointment that the government has not opted to remutualise Northern Rock, which lost £232m in 2010.

A buyer of Northern Rock could also acquire the 600-strong branch network being sold by Lloyds. "A number of assets are up for sale and we'll be looking at all of them," said a Virgin Group spokesman.